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NW Power Supply Adequate, But Much of Surplus Uncommitted
July 13, 2007
Despite the recent hot weather and corresponding high demand for electricity, the Pacific Northwest is unlikely to face an electricity shortage this summer or for the next five years, according to an assessment by the Northwest Power and Conservation Council.
However, while the power supply is adequate, it may not always be inexpensive. Northwest utilities currently are investing in new resources, especially conservation and renewable energy, and that will need to continue to ensure that power remains reliable and affordable in the future, according to the Council.
The assessment shows that while the available power supply exceeds anticipated demand, and will through at least 2012, much of that surplus is not committed to utilities and exists in the wholesale marketplace where prices can be highly volatile and power is sold to the highest bidder. In short, there is a surplus of electricity, but prices could be high, particularly during short-term periods of high demand, as during extremes of weather -- hot or cold.
The assessment is the first to use new benchmarks for electricity system adequacy and reliability that were developed collaboratively by the Council, Bonneville Power Administration, electric utilities, state energy agencies, utility associations in the region, and the Northwest Energy Coalition. The assessment looks three and five years into the future so that potential power supply problems are evident far enough in advance to address before they become emergencies. The assessment is intended as information only and has no force of law.
The Council's 2010 and 2012 adequacy assessments indicate that electricity resources available to the Northwest are adequate," said Council Chair Tom Karier. "The assessment provides a high assurance that the Northwest will avoid blackouts due to an inadequate overall power supply for the next three to five years. This is good news, but it does not ensure that the region will avoid periods of high prices, nor does it ensure that individual utilities have control over enough electricity through contracts with power suppliers or from their own power plants to meet their customers' needs."
So what should utilities do to in the face of a surplus but also the potential for high prices?
Karier said the answer is in the Fifth Northwest Power Plan, which the Council issued in late 2004. The plan directs Bonneville's acquisitions of power and conservation to meet future demand and also serves as a kind of blueprint for utilities in the region to aid their own planning. In addition, most utilities have integrated resource plans that direct their investments in power supply and conservation.
The Council's power plan calls for continuing aggressive efforts to develop energy conservation and renewable resources. Karier said those efforts remain crucial to ensuring the region of an adequate, efficient, economic, and reliable power supply. Karier also noted that many of the region's utilities are working hard to capture conservation opportunities and to acquire generating resources, as required by their integrated resource plans and by state renewable-energy portfolio standards.
"The Council's assessment reinforces the need to continue these efforts so that utilities achieve an appropriate balance between power they buy through long-term contracts at stable prices and power they buy through short-term contracts on the wholesale market, when necessary," Karier said. "This will minimize expenditures over time and also minimize environmental risks, such as the risk of increased emissions from older, dirtier power plants that run mainly when demand for power peaks."
The Council's adequacy assessment says the regional surplus is about 4,000 average megawatts over the next five years -- more than enough to power three cities the size of Seattle for that time period. But because much of that surplus is controlled by independent power producers who sell on the wholesale market, the full amount may not always be available to Northwest utilities. Some of this power already is committed to utilities under contract, including utilities in the Northwest, and the rest is not.
Nonetheless, the Council believes that a reasonable amount of uncommitted power will be available during periods of high demand, but at a potentially high price.
The assessment will be posted on the Council's website, www.nwcouncil.org
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